Contrary to popular belief, recent electricity price hikes are not yet driven by AI demand. Instead, they reflect a system that had already become less reliable due to the retirement of dispatchable coal power and increased dependence on intermittent renewables. The grid was already tight before the current demand wave hit.

While AI's energy demand is soaring, the primary driver of increased consumer electricity prices isn't raw energy consumption. Instead, it's the escalating cost of transmission infrastructure like transformers and wires, which are affected by tariffs, labor costs, and decades of deferred maintenance.

Over the last 20 years in New England's restructured market, the primary driver of higher consumer electricity bills wasn't the cost of power itself, which fell 50% inflation-adjusted. Instead, the cost of transmission and delivery infrastructure skyrocketed by 900%, fundamentally shifting the composition of consumer bills.

The narrative of an impending power generation crisis for AI is misleading. The immediate problem is stranded power from utilities built for peak demand. The short-term solution isn't just more power plants, but investing in energy storage and distribution infrastructure to capture and deliver this vast amount of unused, already-generated power.

The primary bottleneck in the global energy transition is the lack of grid capacity. While building power plants (solar, wind) is relatively straightforward, insufficient investment in transmission and distribution grids leaves vast amounts of new renewable energy stranded and unable to reach consumers.

From the 1980s to 2010s, improvements in appliance and industrial efficiency kept net electricity demand flat. This masked growing energy service needs and allowed the underlying grid infrastructure to stagnate without significant investment, creating today's bottleneck.

The popular narrative of ever-cheaper solar is misleading. While the panel itself is deflationary, it's a shrinking part of the total project cost. Inflationary inputs like land, labor, transmission access, and capital costs are now dominant, causing the price of delivered solar electricity (PPAs) to rise since 2020.

The rise of rooftop solar, local batteries, and on-site generation means power is increasingly produced closer to where it's used. This trend is devaluing long-distance transmission infrastructure and suggests the future grid will be far more decentralized and localized.

Charts showing plummeting solar and wind production costs are misleading. These technologies often remain uncompetitive without significant government subsidies. Furthermore, the high cost of grid connection and ensuring system reliability means their true all-in expense is far greater than component costs suggest.